Interviewed By Mahedi Hasan Omi on behalf of MBR Team

MBR: Anchorless Bangladesh has been doing a tremendous job building a strong community for our ecosystem as well as investing in amazing new ideas. Could you provide us with some context on your investment criteria in a startup, possibly specify some of the qualities a startup must have for it to get funded by Anchorless Bangladesh?

Rahat Ahmed: To start with, it’s about the founders. We understand that technology can change, industries can change as can competitors; so what is important is that we work with founders who we can trust to navigate the market and adjust their product as needed. Beyond that, the startup must be solving a problem effectively in a large market, be able to scale, and have the ambition to win their market. Finally, we look for visibility in future fundraising rounds as well as potential exits.

MBR: What are some common barriers, from a regulatory point of view, that you come across while investing in a startup? Thoughts on any particular policy, that needs attention to unlock access to more quality capital. 

Rahat Ahmed: Arguably the biggest weakness we have seen in the ecosystem is the lack of local investors— especially angels and corporate. According to LightCastle Partners, roughly 93% of early-stage funding to date has come from foreign investors. Policies that encourage investments in startups are critical to innovation that can create value by tapping into global liquidity. Another fundamental step would be for policy decision-makers to talk to institutional investors about what we look for. When the “definition” of a startup is inaccurate, by default, policies for startups become less effective, even when there are good intentions to develop the ecosystem.

MBR: You have been extensively creating awareness on differentiating between a Startup and an SME. Could you share your opinion, as to how investing in a Startup differs from investing in an SME?

Rahat Ahmed: SMEs and startups have completely different investor bases, so when someone with a traditional metric mentality (dividends, net profit, etc.) invests in a startup, it results in a founder-investor mismatch that will ultimately limit the startup’s potential. Those who invest in startups should do so knowing that the primary goal for the founder is to create defensible value through providing a scalable product, service, or technology. Understanding the difference sets wildly different expectations for how a company should operate, which investors it should pursue, and how it should think about the future. Disconnects will not only hurt the companies but also the ecosystem as a whole.

MBR: Bangladesh’s macro story is quite fascinating, no doubt. Yet we see regional peers, getting much more attention from foreign institutional funds when it comes to getting funded. What do you think Bangladesh’s startup ecosystem can do to bridge this gap, as opposed to regional peers?

Rahat Ahmed: Aside from the encouragement of angels and corporate venture, those with access to wealth as well as ecosystem players need to better understand how valuations and multiples work on a global basis. In fact, I can comfortably say that there is more money out there interested in Bangladeshi startups than we have companies that are currently investible. Once we understand how to take advantage of global liquidity, Bangladesh as a whole will see a new level of wealth creation.

MBR: What are some of the industries and possible verticals which excite you more than the others, while you consider investments?

Rahat Ahmed: Domestically, we have five key industries which we believe can produce billion-dollar companies: healthcare, agriculture, education, garments, and fintech. In addition to that, we’re also quite excited about “tech labor arbitrage” plays—which is to say, SaaS and SaaSlike companies that can generate global revenue using local tech talent. These companies can expand quickly into global markets and aim for global valuations.